'Apple's now as big as ALL of America's GDP!' Oh do shut UP, you fools

Read the numbers any way you want, and take your pick

Worstall on Wednesday Apple's results are out and it's time for the traditional game of trying to work out which nation state the company is richer than. With sales at $58bn for the quarter, and profits of $13.7bn – and depending upon how absurd we want to make our method of measurement – this makes it the same as the US economy, the size of Ireland, or Pakistan, or Luxembourg. Take your pick.

If we use the Worstall Method, as we did with Facebook, we'll end up insisting that Apple is now near the size of the US economy, and thus the iPhone Event Horizon is truly upon us.

There is nothing left for human society but to cheer ourselves out of depression by purchasing ever more Jesus Mobe bling, meaning that nothing else is viable to produce, depressing us into purchasing ever more shiny shiny. This would also be the wrong way to measure it.

Back then, with Facebitch, we were noting that we value the contribution to the society, as recorded in the GDP figures, by the amount of ad slinging that was being done. That ad slinging isn't the consumer surplus being enjoyed by site users.

Further, we noted that the consumer surplus on most goods is about twice what consumers pay for them. That, however, doesn't really work for things where the consumer gets it for free; that is, the advertisers are paying for them to get it. And the top end of our estimate was that Facebitch is worth 64 times its recorded contribution to GDP.

So, Apple, at a $240bn per year run rate, is worth $15tn – or close enough to the US GDP of $17tn that that's what we'll call it. Apple is now the size of the entire US.

This is, of course, wrong. Apple consumers pay for their bling directly, thus the consumer surplus is only twice its sales, and so Yah-Boo to the Worstall Method here.

Which gives us Ireland or Pakistan as comparators. GDP of both countries is around the $240-$250bn range, and Apple's turnover is about that, so, you see, they're the same!

Except here we must ask: what is this GDP that we're defining? Whatever the slight changes in our definition of GDP might be (gross, net, domestic, national, product, income), what we're actually trying to measure here is value added, not turnover.

As an example, the turnover of the foreign exchange markets in London alone is $1.5tn a day and up. Yet the total GDP of the UK is £1.7tn and whatever the dollar/sterling exchange rate, we're obviously not including 250 banking days a year of that turnover in GDP.

What we are including is the profits made from doing so plus the wages of those doing the doing. Thus when we look at the “economic size” of a company we should look at profits plus wages paid.

For Apple, well, wages have been variously estimated at $8bn-$13bn a year by different people and its profits are now $14bn a quarter. Call it, to the standard of accuracy required here, in the $60bn-$70bn range.

Yep, for a company that's still a “Whoa! Fuck!” sized amount. But this is close to the GDP of a country: and that puts us at about Luxembourg. This really shouldn't be all that much of a surprise. Both the country and the company comprise a couple of hundred thousand rich world people going to work for a living, and we are trying to measure the value added by their doing so.

The value-add of going to work is what makes a place a rich world country. So, we rather expect the value-add of any random group of rich world people to be about the same. Because they're all rich world people, see?

Luxembourg, in its last census, apparently had 400,000 people. About half of these are not economically active (pensioners, children, stay-at-home housewives; actually, that percentage might be higher given the place's skewed age distribution) so call it 200,000 people working.

Apple's got a bit under 100,000 people working in the company (all those at Foxconn etc are not part of Apple's value-add).

OK, so the value-add per worker at Apple is double (or so) of that in a rich country such as Luxembourg. But we're still within hailing distance of each other with these two numbers. The value-add of 100,000 rich world workers is going to be close-ish to the value-add of another 100,000 rich world workers. Their being rich world workers defines them as being so.